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The Permanent Court of Arbitration (PCA) in The Hague has been hearing arguments recently in The Republic of Philippines v The People’s Republic of China ^[2] case over competing claims in the South China Sea. The move follows its earlier award that it had jurisdiction in the case.

Australia’s position on the case was summed up by Foreign Minister Bishop when she said the case will ^[3] ‘set some legal principles against which China’s actions and the actions of other countries will be judged’. She went on to say that ‘we don’t take sides, we don’t back one player against another—that is a matter for arbitration and negotiation’.

Two aspects of the case are relevant to Australia. The first and most important is that it’s hard for Australia to criticise China for not participating in the arbitration when Australia is also one of relatively few countries that have opted out of mandatory dispute settlement under the 1982 UN Convention on the Law of the Sea (UNCLOS). The second is the possibility that Australia could be affected by the PCA introducing tighter criteria for defining ‘rocks’ and ‘islands’.

Australia lodged a declaration in 2002 ^[4] stating that it doesn’t accept any of the procedures provided for in UNCLOS with respect to disputes relating to sea boundary delimitations. Australia has also lodged a declaration under Article 36(2) of the International Court of Justice (ICJ) Statute excluding sea boundary delimitation disputes from the ICJ’s jurisdiction. The Government is believed to have taken this action ^[5] because it considers that maritime boundary disputes are best resolved through negotiation, not litigation.

The decision of The Philippines to seek arbitration wasn’t widely supported in ASEAN ^[6], reflecting a general preference for negotiations rather than arbitration. The EAS Statement on Enhancing Regional Maritime Cooperation ^[7] adopted at the recent meeting of the East Asia Summit (EAS) in Kuala Lumpur stated an undertaking to resolve sovereignty and territorial disputes by ‘friendly consultations and negotiations’.

After Timor-Leste became independent, it entered into several agreements with Australia covering joint development of part of the Timor Sea for a period of 30 years or until a permanent seabed boundary is delimited. The main agreements are the 2002 Timor Sea Treaty between the Government of East Timor and the Government of Australia (Timor Sea Treaty); and the 2006 Treaty between Australia and the Democratic Republic of Timor-Leste on Certain Maritime Arrangements in the Timor Sea (CMATS Treaty).

Timor-Leste would like to take Australia to arbitration over maritime boundaries, but was prevented by Australia opting out of compulsory dispute resolution over maritime boundaries. Nevertheless, Timor-Leste has initiated arbitration against Australia challenging aspects of the two major treaties ^[8] between the two countries.

In some similarity to the Philippines’ arbitration case, Australia believes its differences with Timor-Leste would be best resolved through consultation and dialogue rather than by arbitration. This supports a general principle that larger players in a sovereignty dispute—for example, China and Australia—want consultation and negotiation while smaller players—the Philippines and Timor-Leste respectively—seek arbitration.

The PCA will be determining the legal entitlements of some disputed features in the Spratly Islands. It’s likely to find that some features are only ‘rocks’ that can’t sustain human habitation or an economic life of their own, and aren’t therefore entitled to an exclusive economic zone (EEZ). The chief advocate for the Philippines at the recent hearing has gone as far as to claim ^[9] that all the features in the Spratlys are ‘rocks’, and thus not entitled to anything more than a territorial sea. The global ramifications of the PCA accepting that claim would be significant as many countries around the world have based expansive maritime claims on features smaller than some in the Spratlys.

Australia has used small and uninhabited features to extend its maritime jurisdiction in the Timor Sea and the Coral Sea—Ashmore and Cartier Islets in the Timor Sea and Mellish, Elizabeth and Middleton Reefs in the Coral Sea. All are smaller than four major features in the Spratlys—Itu Aba and Spratly, West York and Thitu islands. Ashmore and Cartier islets ^[10] were given weight in determining maritime boundaries between Australia and Indonesia although neither country has yet ratified their 1997 boundary agreement.

Mellish Reef ^[11] has been used as a base-point for the maritime boundary between Australia and the Solomon Islands, which in turn used Indispensable Reef as its base-point. Mellish Reef has a small sand cay about 1.5 meters high, but Indispensable Reef is reported to have only two rocks awash at high tide. If neither of the base-points are valid, questions arise as to whether there can be a valid boundary at all. However, validity would have to be challenged by a third state and that’s unlikely. Similar difficulties arise with Elizabeth and Middleton Reefs ^[12], which are said to be periodically submerged, but have been used as base-points in the maritime boundary between Australia and France (New Caledonia).

While this concern for Australia is mainly of an academic nature, other countries around the world with maritime claims based on small outlying features will also be watching what the PCA might determine. Japan could be particularly affected with its extensive EEZ and outer continental shelf claimed from Okinotori-Shima in the Pacific Ocean—the only naturally-formed parts of this feature ^[13] above high tide are several small rocks.